Abstract: This study uses the history of Malaysian democracy to explore questions about the relationship between changing social structures and Islamic discourses in shaping the prospects for further democratization in the Muslim world. Social and historical factors have created incentives for a less authoritarian and more economically successful political economy than in much of the Muslim world, but Malaysia remains at best a semi-democracy. The primary reason for that is a complex structure of ethnic cleavage and ethnic accommodation. However, as economic pressures have undermined the traditional system of ethnic economic preference, the importance of Islamic politics has been a key intervening variable in preventing the emergence of a more liberal opposition to the ruling political coalition.